“Over the coming year, even with slower appreciation in home values, negative equity is predicted to fall to 13.2%, freeing more than 650,000 homeowners, moving their loan-to-value ratio into the black,” Zillow writes in its Q2 report on negative equity. “Some metropolitan areas are already seeing their rates approaching more ‘normal’ levels of negative equity; however the distortions negative equity causes will stay with us for the foreseeable future.”
Zillow says the rate of underwater homes across the nation will continue to drop as time goes on.
The rate of negative equity among mortgaged homes dropped to 14.4% according to Zillow’s report, released earlier this month.
That’s a drastic decline over the peak of 31.4% underwater homes in 2012.
Still, there are several cities that continue to struggle. Las Vegas leads the way in terms of underwater homes (25%), followed by Chicago (22%), Atlanta (21%), and St. Louis (19%).
However, originators in those markets may not be feeling the pressure.
“It’s not really affecting my business,” Dan French, a mortgage loan officer with Nova Home Loans in Las Vegas, told Mortgage Professional America. “A lot of people are going into short sales and the homes are still selling; a short sale
allows the client to recover quickly and improve their credit,” which a foreclosure won’t allow.
So what percentage of homes in your state are currently underwater? Check out the infographic below.
Underwater mortgages have fallen below half of what they once were, according to recently released data; but how is your city performing?